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11 sales at Bayleys Total Property auction

All but one of 5 bank branches go

Bayleys sold 11 properties for $10 million today in the Auckland round of its five-auction Total Property series.

Sales:

5 Oates Rd, Glen Eden, 11,584m² development site, currently a shopping centre anchored by a 3 Guys with seven specialty shops, $2.25 million.

Caddy Shack Bar & Grill, Station Rd, Manurewa, $245,000 at 18% on rent from next June.

State Insurance Building, Ronwood Ave, Manukau City, $950,000.

ASB Bank, Broadway, Kaikohe, $201,000 at 14.3%.

ANZ Bank, Hinemoa St, Rotorua, $1,825,000 at 10.4%.

BNZ Bank, Great South Rd, Papakura, $945,000 at 13%.

Unit B, 18 Shortland St, travel centre tenant (ex-National Bank building ground floor), $810,000 at 12.3%.

Six strata-titled levels, 109 Queen St, sold before auction for an undisclosed sum.

ANZ Bank, Pollen St, Thames, $787,000 at 9.9%.

Harbour View Cafe on The Esplanade, Whitianga, $430,000 at 6.98%.

Hannahs and Just Jeans stores, Great South Rd, Papakura, $780,000 at 12.2%.

Unsold:

Negotiations are continuing on most of the unsold properties. Top bids on those were:

1 Earnoch Ave, 110m² historical building 100m from Takapuna waterfront, $330,000.

Six sections above golf course, Hibiscus Coast Highway, Orewa, $345,000.

ANZ Bank, Great South Rd, Papatoetoe, $910,000.

11 Hargreaves St, College Hill, 389m² office building, vacant possession, $385,000.

Corner East Tamaki and Preston Rds, East Tamaki, 1027m² site and vacant 140m² showroom, $260,000.

81 Grafton Rd, Grafton, four-level 988m² refurbished office building, $1,105,000.

Unit C, 8 Torrens Rd, East Tamaki, 447m² retail showrooms, half vacant, $370,000.

16-20 New North Rd, Eden Tce, 619m² office and showroom, $630,000.

22 Bell Ave, Mt Wellington, 8858m² high-stud warehouse on new 10-year lease to Phoenix Freight, no bids.

221-225 Hinemoa St, Birkenhead, 729m² showroom/warehouse plus four-bedroom penthouse apartment, $650,000.

Corner Sunnybrae and Archers Rds, Glenfield, 1123m² warehouse and first-floor office, vacant possession, $735,000.

21A Stonedon Drive, East Tamaki, 690m² high-stud vacant standalone factory unit, $302,500.

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Bayleys’ Total series heads south

Seven sales in Tauranga, Napier, Wellington, Christchurch

Bayleys Real Estate continued its Total Property auction series in Wellington & Tauranga on Thursday, Napier & Christchurch on Friday.

Tauranga:

Tauranga, 1370-1374 Cameron Rd, Countdown supermarket on 15-year lease top Progressive Enterprises Ltd ending on 1 July 2005, with a rent review next July & two six-year rights of renewal, earning $169,500/year, passed in at $1.54 million (at 11% yield).

Tauranga, 7 Barberry St, three-year-old industrial building with super-high stud, earning net $37,000, first up at the auction and sold for $436,500 at 8.5% yield.

Napier:

Onekawa, 25 Austin St, 1021m² steel-framed industrial building containing five warehouse/office units, on 2020m² site, recently refurbished, earning net $59,250 from five tenancies, sold for $509,000 at 11.64% yield.

Napier, 102-104 Station St, new single-storey 390m² office building in two tenancies with leases of six years (Bayleys) & three years (NZI), earning $55,720, sold before auction for an undisclosed sum.

Napier, Hastings St through to Marine Parade, former AMP building plus two adjoining properties, total building area 4800m² on 2780m² site withdrawn from auction.

Hastings, St Aubyn/Hastings/Ellison Sts, the old Leopard Brewery which Lower Hutt developer Joe Feickert (Trading Holdings Ltd) bought a year ago & cut in six for sale in separate lots. He sold some to owner-occupiers but got no bids for the three lots offered at auction on Friday.

Hastings, 117 Heretaunga St West, the four-level BNZ building containing 1795m² of office space and ground-floor banking chamber, earning $174,200 with second floor vacant, passed in at $1.45 million at 12% yield (or about 14% on fully leased basis).

Wellington:

Petone, 5 Bouverie St, vacant 1631m² factory with office, canopies & 900m² yard with development potential, previously occupied by JJ Fraser Engineering Petone Ltd, sold before auction for $1.02 million.

Lower Hutt, Seaview, 3 Gough St, a second JJ Fraser property, 860m² of factory on a 1031m² site just off the Seaview Rd roundabout, sold vacant for $365,000. JJ Fraser is relocating to one building in Wingate.

Christchurch:

Corner Armagh St/Fitzgerald Avenue, 653m² building occupied by Specialist Education Service on 1531m² site, next rent review in two years, sold for $900,000 at 10.64% yield.

Sockburn, 53-63 Treffers Rd, 1637m² warehouse/office on 5003m² site, occupied by Dylan Turner Carriers Ltd on new six-year lease at $66/m², sold for $1 million (to a Central Otago buyer who’d come to Christchurch for Colliers Jardine’s KFC auction, only to find the portfolio all sold the day before), on 10.8% yield.

222 St Asaph St, 684m² warehouse/showroom on 847m² site with rear street access from Welles St, passed in at $405,000.

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Dickens gives speculative housing bubble a short future

Banker warns on speculative bubble, but retirement village chief sees continuing growth

ASB Bank’s head of economic research, Dr Rodney Dickens, told an industry dinner last night that, on top of interest rates & migration, speculation was feeding the housing boom.

He was aghast, but there was hardly a ripple of surprise round the room. It was, after all, the Property Council’s multi-unit residential dinner, attended by a fair number of people whose business includes erecting hundreds of apartments & flats around Auckland.

They know the numbers: the bank requires a reasonably high percentage of precommitment before it will lend, and the more units that can be held off the market for a price increase towards the end of construction, the better. The risk in that is that the units held out from initial sales won’t sell later, and the developer’s margin will disappear.

A large percentage of their market is investors rather than occupiers, and plenty of investors have already been burned by poor returns.

But in Auckland, the residential property market is as much about investment as having a home. The record churn of house sales is testimony to that.

Dr Dickens said it was the biggest boom in 30 years (the last boom of this scale ended in 1973, under a Labour government elected at the end of 1972).

His research showed consents for conventional houses should peak in late 2003-early 2004, up to 15% above the current level. He said annual house sales should peak around 117,000 early next year.

His research also showed another 7000 apartments were likely to be added in the Auckland cbd by the 1st half of 2005, not the 4000 previously forecast.

Dr Dickens said that to understand the behaviour of the Reserve Bank – which he said was feeding the boom by “monetary policy madness” & “playing all sorts of games” – “Look at their last big mistake and see how they butt-cover.”

After a monetary policy mistake in 1998, the bank had started looking at forecasts for global growth. “Since then these movements in the official cashrate have been tied to that.”

Business confidence surveys of the G7 nations gave 3 months’ warning of what economists would predict, and the confidence scale was rising, driven by cuts in interest rates. Dr Dickens said a recovery in global growth was the biggest threat to the New Zealand property market, because interest rates would rise and the net migration inflow could fall.

He believed the odds of a reversal in migration numbers in 2-3 years was high.

Bourke sees retirement villages moving to multi-unit buildings, wants banks to enable rental sector

Peter Bourke, managing director of retirement village developer Vision Senior Living Ltd, said the retirement village industry was tending towards multi-unit development, but the multi-unit sector was restricted by tight short-term financial constraints.

“In the retirement market, it would be good to have a rental product. We’ve had a good look at this, but it’s not possible for us to fund this type of investment.”

Mr Bourke said the mainstream US banks funded the complete construction phase before commitment, which took the desperation out of the industry.

Disagreeing with Dr Dickens’ forecasts as far as the retirement village industry was concerned, he said “there are other trends on the move.” Babyboomers would reach retirement age between 2006-2020, feeding the retirement village market but also requiring quite different lifestyle features.

Fijian development planned

Vision Senior Living’s latest project is a proposed $124 million village for 500 residents at Sawari Bay, 10 minutes south of Lautoka in Fiji, in a 50:50 joint venture with the Fijian Government.

When owners aren’t there, their bure will go into the resort’s leasing pool. A Fiji Government incentive is that for the 1st 20 years the investment will be tax-free.

Website: Vision Senior Living

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Strong gain by backpackers

Hotel & motel sectors also gain in overall 6% rise

Backpacker accommodation gained strongly in October, with an increase of 15.4% in guest nights and a 3.7-point rise in the occupancy rate over figures for October 2000, to 40.9%.

The hotel/resort sector, by comparison, had a solid-enough 5.6% rise in guest nights for a 0.5-point rise in occupancy to 53.8%.

The motel/motor inn/apartment sector also had an increase in guest nights, by 4.9%, and a 1.8-point rise in occupancy to 52.4%.

There were 312 backpacker establishments on Statistics NZ’s register in October, up 4% on a year ago, with capacity up 5.6%.

The hosted accommodation sector fared more poorly, with a 5.1% increase in the number of establishments and 3.3% capacity rise, but a 5.4% fall in guest nights and a 1.9-point fall in occupancy to 22.3%.

Across the whole accommodation sector (excluding camping grounds/caravan parks), there was a 3.4% increase in capacity, a 6.3% rise in guest nights and a 1.5-point rise in occupancy to 48.9%.

Government Statistician Brian Pink said the 2.1 million total guest nights was 6% up on October 2000, and followed an 11% rise in August and 10% rise in September.

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Retail centres big earners, cbd office poor

Shopping centres the strong growth sector, capital declines hit office

Returns from shopping centre ownership looked very good in the year to June and industrial property returns were healthy, but in the cbd office sector falls in capital values took away most of the income gains.

The Property Council research, conducted this year by Nicole Humphries, shows a strong income stream from the office sector — 8.11% in the Auckland cbd, 10.4% in Wellington and 8.3% in non-cbd Auckland.

But in both Auckland and Wellington cbds the capital movement was negative, by 7.2%, with a 3.45% negative movement in non-cbd Auckland.

That left the overall office sector up 1.66% for the year, the Auckland cbd’s total return up 0.62%, Wellington cbd up 2.79% and non-cbd Auckland up 4.71%.

The industrial sector performance mostly reflects Auckland activity, which showed an income return of 10.11%, capital fall of 1.68% for a total return of 8.35%. Christchurch industrial property showed an 8.26% income return and no capital movement.

In the retail sector, income return from shopping centres was 9.6%, capital gain 4.99% for a total return of 14.83%. Returns from bulk retail were 10.36 income, 2.58% capital for a total 13.07%.

The Property Council’s performance indices reflect returns filed by 21 property owners and managers on 338 properties worth $4.32 billion and covering 2.2 million m² of net lettable area.

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Median house price rises 10.5%

Auckland median up 11%

The national median house price rose 10.5% to $193,400 in January from the $175,000 in January 2001, up $1400 from December but down $1600 on November.

January sales totalled 8159 compared to 4741 in January 2001 and 5214 in January 2000. Auckland sales were 2832, up from 2288 in January 2002.

National Real Estate Institute president Graeme Woodley said the rise in prices across the main centres was surprisingly uniform and tended to negate suggestions that larger markets such as Auckland were driving the rise in the national median price.

The Auckland median rose 11% to $272,000. The North Shore median rose 19.4% to $320,000, Auckland City 12.5% to $315,000, Manukau 7.8% to $269,500, Waitakere 13.8% to $222,000.

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Bayleys auction, 13 September

Apartments in three developments passed in

In the Bayleys auction room today, unit 1304 Heritage Tower (a sub-penthouse in the new tower building on Nelson St) was passed in with a top bid of $1.07 million. It has three bedrooms and three bathrooms and was taken to auction by the developers, Symphony Group.

Unit 16D of Quay West, a fully furnished two-bedroom apartment, was passed in at $485,000 and unit 301 of the Sebel hotel on the Viaduct Basin, a fully furnished one-bedroom suite which is part of Mirvac’s hotel management pool, was passed in at $400,000.

The one industrial lot offered at the Bayleys auction, a 233m² high stud warehouse with office, unit 6 at 517 Mt Wellington Highway, was passed in at $305,000.

On the Whangaparaoa Peninsula, 5.63ha of the Shakespear estate was passed in at $1.07 million. Subdivision plans have been drawn up for either eight or 46 lots for the land, fronting Okoromai Bay on the edge of the Shakespear regional park and just past the Gulf Harbour marina and golf course development. The property has been in the Shakespear family for four generations, since 1880, but recently has been grazed by regional council stock.

At Whitianga, a 60ha property suitable for horticulture and 6000m² site on a separate title on Purangi Rd, Flaxmill Bay, went on the market at $650,000 and were sold at that figure.

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Kelland on move

Kelland moving

Kelland Real Estate plans to be on the move in a few months, but the question on staff lips at the end of last week was: which design?

The small firm established by Deborah Kelland (below) in Bath St, Parnell, operates from open rented premises with large floor-to-ceiling windows opening on to a sheltered balcony.

Ms Kelland has bought an old villa in the middle of the small Gladstone Rd shopping centre, up from the Rose Gardens and across the Parnell gully, but wanted her staff’s views on which design to opt for. The choice, between Jasmax, Brent Hulena and Fearon Hay, should be decided this week.

All designs have a gallery, and the design of Geoff Fearon and Tim Hay also has a tree inside an atrium, with the gallery looking on to it. The 404m² site allows for a net 404m² of floor area.

“We hope to be in by October,” Ms Kelland said.

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Backpacker traffic keeps growing

But still a long way before “Full house” signs up

Backpacker traffic continued to rise in August ahead of the hotel and motel sectors, Statistics New Zealand’s latest short-stay accommodation survey shows.

The number of backpacker establishments keeps rising — by 8% in August to 308, with capacity up 7.1% to 510,000 stay/unit nights. But that increase in capacity was more than filled, with a 13.6% rise in guest nights and an increase in occupancy rate of 2.3 points to 36.8%.

However, The backpacker sector remains a generally low-occupancy business, with a high of 61.8% in January and only three other months above 50%. The hotel sector, which generally ought to have peak occupancy above 70% (but doesn’t because of over-capacity), has at least topped 50% in eight of the last 13 months.

At the bottom end of the market, curiously, there was a 15.9% surge in guest nights in caravan parks & camping grounds in August. The occupancy rate rose 0.9 of a point to 6.5%, which is a 16% rise.

The hotel and motel sectors also continued the strong growth evident throughout this year (with, of course, the test to come of September figures affected by international terrorism).

Both sectors had a rise of just under 2% in the number of establishments, hotel capacity rose 3.5% and motel capacity rose 3%. Hotel guest nights rose 10.3%, motel guest nights 9.9%, hotel occupancy rose 3 points to 51.4% and motel occupancy 2 points to 45.4%.

Across the industry, excluding camping/caravans, capacity rose 4.2%, guest nights 10.5% and occupancy 2.3 points to 44.7%.

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Leading speakers for real estate management conference

Seminars coincide with Property Investors congress

The 1st New Zealand real estate management conference will be held at the Carlton Hotel in Auckland on Wednesday 20 August, to coincide with the annual congress of the New Zealand Property Investors Federation.

The Auckland Property Investors Association is running the federation’s annual conference this year, at the Hyatt Hotel, the weekend of 22-24 August.
Details, external links page 3 August 2003

Keynote speaker at the management conference will be Jeffrey Taylor, better known as MrLandlord.
Website: MrLandlord

The conference organisers say it’s all very well to invest in real estate, but no good if it doesn’t make money. “The major reason expressed by rental property owners for giving up their investment is because it didn’t make any cash. In fact, it cost them money.”

Mr Taylor is based in Virginia and is making his 1st visit to New Zealand. He will speak twice at the conference, 1st at the Gold event then at the Evening event. He’s rated the world’s best trainer of landlords in real estate management profitability and will show & discuss methods & systems that will secure & retain residents while best benefiting the landlord.

The Gold event is a half-day seminar which will include 2 other speakers, business structure specialist Garth Melville and real estate investment specialist Michael Pettett, also known as TheGrocer.
Website: Garth & Carolyn Melville’s business, Company Solutions Ltd, which they started in 1986.

Michael Pettett’s website, REi Toolbelt, is both highly entertaining & highly useful, with plenty of interactive scope. It lists gurus, web tools, forums, allows you to start Blogs there and lists real estate investment clubs (plenty in the US, none in NZ). Writing this on a rainy afternoon, I enjoyed reading the visit to his lawyer on a lazy sunny day. English-born Mr Pettett now lives in Auckland.
Website: MrGrocer

Participants in the Gold package get to have dinner with Mr Taylor and can also go to the Evening (Platinum) 3-hour seminar — MrLandlord, TheGrocer & a property investment specialists’ fair, designed for those landlords who still have 9-5 commitments (tickets at Ticketek).

Mr Taylor established Mrlandlord.com after 20 years of owning & managing investment properties. He’s now chief executive of Mr Landlord Inc, a national property management consulting firm which coaches landlords with anything from 1 to 1000 rentals.

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